Retail banking known as consumer banking, is the provision of services by a bank to the general public, rather than to companies, corporations or other banks, which are described as wholesale banking. Banking services which are regarded as retail include provision of savings and transactional accounts, personal loans, debit cards, credit cards. Retail banking is distinguished from investment banking or commercial banking, it may refer to a division or department of a bank which deals with individual customers. In the U. S. the term commercial bank is used for a normal bank to distinguish it from an investment bank. After the Great Depression, the Glass–Steagall Act restricted normal banks to banking activities, investment banks were limited to engaging capital market activities; that distinction was repealed in the 1990s. Commercial bank can refer to a bank or a division of a bank that deals with deposits and loans from corporations or large businesses, as opposed to individual members of the public.
Typical retail banking services offered by banks include: Transactional accounts Checking accounts Current accounts Savings accounts Debit cards ATM cards Credit cards Traveler's cheques Mortgages Home equity loans Personal loans Certificates of deposit/Term depositsIn some countries, such as the U. S. retail bank services include more specialised accounts, such as: Sweep accounts Money market accounts Individual Retirement Accounts Community development bank are regulated banks that provide financial services and credit to underserved markets or populations. Private banks manage the assets of high-net-worth individuals. Offshore banks are banks located in jurisdictions with low regulation. Many offshore banks are private banks. Savings banks accept savings deposits. Postal savings banks are savings banks associated with national postal systems. Banking institution Bank
Japan is an island country in East Asia. Located in the Pacific Ocean, it lies off the eastern coast of the Asian continent and stretches from the Sea of Okhotsk in the north to the East China Sea and the Philippine Sea in the south; the kanji that make up Japan's name mean "sun origin", it is called the "Land of the Rising Sun". Japan is a stratovolcanic archipelago consisting of about 6,852 islands; the four largest are Honshu, Hokkaido and Shikoku, which make up about ninety-seven percent of Japan's land area and are referred to as home islands. The country is divided into 47 prefectures in eight regions, with Hokkaido being the northernmost prefecture and Okinawa being the southernmost one; the population of 127 million is the world's tenth largest. 90.7 % of people live in cities. About 13.8 million people live in the capital of Japan. The Greater Tokyo Area is the most populous metropolitan area in the world with over 38 million people. Archaeological research indicates; the first written mention of Japan is in Chinese history texts from the 1st century AD.
Influence from other regions China, followed by periods of isolation from Western Europe, has characterized Japan's history. From the 12th century until 1868, Japan was ruled by successive feudal military shōguns who ruled in the name of the Emperor. Japan entered into a long period of isolation in the early 17th century, ended in 1853 when a United States fleet pressured Japan to open to the West. After nearly two decades of internal conflict and insurrection, the Imperial Court regained its political power in 1868 through the help of several clans from Chōshū and Satsuma – and the Empire of Japan was established. In the late 19th and early 20th centuries, victories in the First Sino-Japanese War, the Russo-Japanese War and World War I allowed Japan to expand its empire during a period of increasing militarism; the Second Sino-Japanese War of 1937 expanded into part of World War II in 1941, which came to an end in 1945 following the Japanese surrender. Since adopting its revised constitution on May 3, 1947, during the occupation led by SCAP, the sovereign state of Japan has maintained a unitary parliamentary constitutional monarchy with an Emperor and an elected legislature called the National Diet.
Japan is a member of the ASEAN Plus mechanism, UN, the OECD, the G7, the G8, the G20, is considered a great power. Its economy is the world's third-largest by nominal GDP and the fourth-largest by purchasing power parity, it is the world's fourth-largest exporter and fourth-largest importer. Japan benefits from a skilled and educated workforce. Although it has renounced its right to declare war, Japan maintains a modern military with the world's eighth-largest military budget, used for self-defense and peacekeeping roles. Japan is a developed country with a high standard of living and Human Development Index, its population enjoys the highest life expectancy and third lowest infant mortality rate in the world, but is experiencing issues due to an aging population and low birthrate. Japan is renowned for its historical and extensive cinema, influential music industry, video gaming, rich cuisine and its major contributions to science and modern technology; the Japanese word for Japan is 日本, pronounced Nihon or Nippon and means "the origin of the sun".
The character nichi means "sun" or "day". The compound therefore means "origin of the sun" and is the source of the popular Western epithet "Land of the Rising Sun"; the earliest record of the name Nihon appears in the Chinese historical records of the Tang dynasty, the Old Book of Tang. At the end of the seventh century, a delegation from Japan requested that Nihon be used as the name of their country; this name may have its origin in a letter sent in 607 and recorded in the official history of the Sui dynasty. Prince Shōtoku, the Regent of Japan, sent a mission to China with a letter in which he called himself "the Emperor of the Land where the Sun rises"; the message said: "Here, I, the emperor of the country where the sun rises, send a letter to the emperor of the country where the sun sets. How are you". Prior to the adoption of Nihon, other terms such as Yamato and Wakoku were used; the term Wa is a homophone of Wo 倭, used by the Chinese as a designation for the Japanese as early as the third century Three Kingdoms period.
Another form of Wa, Wei in Chinese) was used for an early state in Japan called Nakoku during the Han dynasty. However, the Japanese disliked some connotation of Wa 倭, it was therefore replaced with the substitute character Wa, meaning "togetherness, harmony"; the English word Japan derives from the historical Chinese pronunciation of 日本. The Old Mandarin or early Wu Chinese pronunciation of Japan was recorded by Marco Polo as Cipangu. In modern Shanghainese, a Wu dialect, the pronunciation of characters 日本; the old Malay word for Japan, Japun or Japang, was borrowed from a southern coastal Chinese dialect Fukienese or Ningpo – and this Malay word was encountered by Portuguese traders in Southeast Asia in the 16th century. These Early Portuguese traders brought the word
Foreign exchange market
The foreign exchange market is a global decentralized or over-the-counter market for the trading of currencies. This market determines the foreign exchange rate, it includes all aspects of buying and exchanging currencies at current or determined prices. In terms of trading volume, it is by far the largest market in the world, followed by the Credit market; the main participants in this market are the larger international banks. Financial centers around the world function as anchors of trading between a wide range of multiple types of buyers and sellers around the clock, with the exception of weekends. Since currencies are always traded in pairs, the foreign exchange market does not set a currency's absolute value but rather determines its relative value by setting the market price of one currency if paid for with another. Ex: US$1 is worth X CAD, or CHF, or JPY, etc; the foreign exchange market operates on several levels. Behind the scenes, banks turn to a smaller number of financial firms known as "dealers", who are involved in large quantities of foreign exchange trading.
Most foreign exchange dealers are banks, so this behind-the-scenes market is sometimes called the "interbank market". Trades between foreign exchange dealers can be large, involving hundreds of millions of dollars; because of the sovereignty issue when involving two currencies, Forex has little supervisory entity regulating its actions. The foreign exchange market assists international trade and investments by enabling currency conversion. For example, it permits a business in the United States to import goods from European Union member states Eurozone members, pay Euros though its income is in United States dollars, it supports direct speculation and evaluation relative to the value of currencies and the carry trade speculation, based on the differential interest rate between two currencies. In a typical foreign exchange transaction, a party purchases some quantity of one currency by paying with some quantity of another currency; the modern foreign exchange market began forming during the 1970s.
This followed three decades of government restrictions on foreign exchange transactions under the Bretton Woods system of monetary management, which set out the rules for commercial and financial relations among the world's major industrial states after World War II. Countries switched to floating exchange rates from the previous exchange rate regime, which remained fixed per the Bretton Woods system; the foreign exchange market is unique because of the following characteristics: its huge trading volume, representing the largest asset class in the world leading to high liquidity. As such, it has been referred to as the market closest to the ideal of perfect competition, notwithstanding currency intervention by central banks. According to the Bank for International Settlements, the preliminary global results from the 2016 Triennial Central Bank Survey of Foreign Exchange and OTC Derivatives Markets Activity show that trading in foreign exchange markets averaged $5.09 trillion per day in April 2016.
This is down from $5.4 trillion in April 2013 but up from $4.0 trillion in April 2010. Measured by value, foreign exchange swaps were traded more than any other instrument in April 2016, at $2.4 trillion per day, followed by spot trading at $1.7 trillion. The $5.09 trillion break-down is as follows: $1.654 trillion in spot transactions $700 billion in outright forwards $2.383 trillion in foreign exchange swaps $96 billion currency swaps $254 billion in options and other products Currency trading and exchange first occurred in ancient times. Money-changers were living in the Holy Land in the times of the Talmudic writings; these people used city stalls, at feast times the Temple's Court of the Gentiles instead. Money-changers were the silversmiths and/or goldsmiths of more recent ancient times. During the 4th century AD, the Byzantine government kept a monopoly on the exchange of currency. Papyri PCZ I 59021, shows the occurrences of exchange of coinage in Ancient Egypt. Currency and exchange were important elements of trade in the ancient world, enabling people to buy and sell items like food and raw materials.
If a Greek coin held more gold than an Egyptian coin due to its size or content a merchant could barter fewer Greek gold coins for more Egyptian ones, or for more material goods. This is why, at some point in their history, most world currencies in circulation today had a value fixed to a specific quantity of a recognized standard like silver and gold. During the 15th century, the Medici family were required to open banks at foreign locations in order to exchange currencies to act on behalf of textile merchants. To facilitate trade, the bank created the nostro account book which contained two columned entries showing amounts of foreign and local currencies. During the 17th century, Amsterdam maintained an active Forex market. In 1704, foreign exchange took place between agents acting in the interests of the Kingdom of Englan
A bank is a financial institution that accepts deposits from the public and creates credit. Lending activities can be performed either indirectly through capital markets. Due to their importance in the financial stability of a country, banks are regulated in most countries. Most nations have institutionalized a system known as fractional reserve banking under which banks hold liquid assets equal to only a portion of their current liabilities. In addition to other regulations intended to ensure liquidity, banks are subject to minimum capital requirements based on an international set of capital standards, known as the Basel Accords. Banking in its modern sense evolved in the 14th century in the prosperous cities of Renaissance Italy but in many ways was a continuation of ideas and concepts of credit and lending that had their roots in the ancient world. In the history of banking, a number of banking dynasties – notably, the Medicis, the Fuggers, the Welsers, the Berenbergs, the Rothschilds – have played a central role over many centuries.
The oldest existing retail bank is Banca Monte dei Paschi di Siena, while the oldest existing merchant bank is Berenberg Bank. The concept of banking may have begun in ancient Assyria and Babylonia, with merchants offering loans of grain as collateral within a barter system. Lenders in ancient Greece and during the Roman Empire added two important innovations: they accepted deposits and changed money. Archaeology from this period in ancient China and India shows evidence of money lending. More modern banking can be traced to medieval and early Renaissance Italy, to the rich cities in the centre and north like Florence, Siena and Genoa; the Bardi and Peruzzi families dominated banking in 14th-century Florence, establishing branches in many other parts of Europe. One of the most famous Italian banks was the Medici Bank, set up by Giovanni di Bicci de' Medici in 1397; the earliest known state deposit bank, Banco di San Giorgio, was founded in 1407 at Italy. Modern banking practices, including fractional reserve banking and the issue of banknotes, emerged in the 17th and 18th centuries.
Merchants started to store their gold with the goldsmiths of London, who possessed private vaults, charged a fee for that service. In exchange for each deposit of precious metal, the goldsmiths issued receipts certifying the quantity and purity of the metal they held as a bailee; the goldsmiths began to lend the money out on behalf of the depositor, which led to the development of modern banking practices. The goldsmith paid interest on these deposits. Since the promissory notes were payable on demand, the advances to the goldsmith's customers were repayable over a longer time period, this was an early form of fractional reserve banking; the promissory notes developed into an assignable instrument which could circulate as a safe and convenient form of money backed by the goldsmith's promise to pay, allowing goldsmiths to advance loans with little risk of default. Thus, the goldsmiths of London became the forerunners of banking by creating new money based on credit; the Bank of England was the first to begin the permanent issue of banknotes, in 1695.
The Royal Bank of Scotland established the first overdraft facility in 1728. By the beginning of the 19th century a bankers' clearing house was established in London to allow multiple banks to clear transactions; the Rothschilds pioneered international finance on a large scale, financing the purchase of the Suez canal for the British government. The word bank was taken Middle English from Middle French banque, from Old Italian banco, meaning "table", from Old High German banc, bank "bench, counter". Benches were used as makeshift desks or exchange counters during the Renaissance by Jewish Florentine bankers, who used to make their transactions atop desks covered by green tablecloths; the definition of a bank varies from country to country. See the relevant country pages under for more information. Under English common law, a banker is defined as a person who carries on the business of banking by conducting current accounts for his customers, paying cheques drawn on him/her and collecting cheques for his/her customers.
In most common law jurisdictions there is a Bills of Exchange Act that codifies the law in relation to negotiable instruments, including cheques, this Act contains a statutory definition of the term banker: banker includes a body of persons, whether incorporated or not, who carry on the business of banking'. Although this definition seems circular, it is functional, because it ensures that the legal basis for bank transactions such as cheques does not depend on how the bank is structured or regulated; the business of banking is in many English common law countries not defined by statute but by common law, the definition above. In other English common law jurisdictions there are statutory definitions of the business of banking or banking business; when looking at these definitions it is important to keep in mind that they are defining the business of banking for the purposes of the legislation, not in general. In particular, most of the definitions are from legislation that has the purpose of regulating and supervising banks rather than regulating the actual business of banking.
However, in many cases the statutory definition mirrors the common law one. Examples of statutory definitions: "banking business" means the business of receiving money on current or deposit account and collecting cheques drawn by or paid in by customers, the making
A payday loan is a small, short-term unsecured loan, "regardless of whether repayment of loans is linked to a borrower's payday." The loans are sometimes referred to as "cash advances," though that term can refer to cash provided against a prearranged line of credit such as a credit card. Payday advance loans rely on the consumer having previous employment records. Legislation regarding payday loans varies between different countries, in federal systems, between different states or provinces. To prevent usury, some jurisdictions limit the annual percentage rate that any lender, including payday lenders, can charge; some jurisdictions outlaw payday lending and some have few restrictions on payday lenders. In the United States, the rates of these loans used to be restricted in most states by the Uniform Small Loan Laws, with 36–40% APR the norm. There are many different ways. Depending on which method is used, the rate calculated may differ dramatically. Although some have noted that these loans appear to carry substantial risk to the lender, it has been shown that these loans carry no more long term risk for the lender than other forms of credit.
These studies seem to be confirmed by the United States Securities and Exchange Commission filings of at least one lender, who notes a charge-off rate of 3.2%. The basic loan process involves a lender providing a short-term unsecured loan to be repaid at the borrower's next payday; some verification of employment or income is involved, although according to one source, some payday lenders do not verify income or run credit checks. Individual companies and franchises have their own underwriting criteria. In the traditional retail model, borrowers visit a payday lending store and secure a small cash loan, with payment due in full at the borrower's next paycheck; the borrower writes a postdated check to the lender in the full amount of the loan plus fees. On the maturity date, the borrower is expected to return to the store to repay the loan in person. If the borrower does not repay the loan in person, the lender may redeem the check. If the account is short on funds to cover the check, the borrower may now face a bounced check fee from their bank in addition to the costs of the loan, the loan may incur additional fees or an increased interest rate as a result of the failure to pay.
In the more recent innovation of online payday loans, consumers complete the loan application online. The funds are transferred by direct deposit to the borrower's account, the loan repayment and/or the finance charge is electronically withdrawn on the borrower's next payday. According to a study by The Pew Charitable Trusts, "Most payday loan borrowers are white and are 25 to 44 years old. However, after controlling for other characteristics, there are five groups that have higher odds of having used a payday loan: those without a four-year college degree. Most borrowers use payday loans to cover ordinary living expenses over the course of months, not unexpected emergencies over the course of weeks; the average borrower is indebted about five months of the year. This reinforces the findings of the U. S. Federal Deposit Insurance Corporation study from 2011 which found black and Hispanic families, recent immigrants, single parents were more to use payday loans. In addition, their reasons for using these products were not as suggested by the payday industry for one time expenses, but to meet normal recurring obligations.
Research for the Illinois Department of Financial and Professional Regulation found that a majority of Illinois payday loan borrowers earn $30,000 or less per year. Texas' Office of the Consumer Credit Commissioner collected data on 2012 payday loan usage, found that refinances accounted for $2.01 billion in loan volume, compared with $1.08 billion in initial loan volume. The report did not include information about annual indebtedness. A letter to the editor from an industry expert argued that other studies have found that consumers fare better when payday loans are available to them. Pew's reports have focused on how payday lending can be improved, but have not assessed whether consumers fare better with or without access to high-interest loans. Pew's demographic analysis was based on a random-digit-dialing survey of 33,576 people, including 1,855 payday loan borrowers. In another study, by Gregory Elliehausen, Division of Research of the Federal Reserve System and Financial Services Research Program at the George Washington University School of Business, 41% earn between $25,000 and $50,000, 39% report incomes of $40,000 or more.
18% have an income below $25,000. In the UK Sarah-Jayne Clifton of the Jubilee Debt Campaign said, “austerity, low wages, insecure work are driving people to take on high cost debt from rip-off lenders just to put food on the table. We need the government to take urgent action, not only to rein in rip-off lenders, but to tackle the cost of living crisis and cuts to social protection that are driving people towards the loan sharks in the first place.” The likelihood that a family will use a payday loan increases if they are unbanked or underbanked, or lack access to a traditional deposit bank account. In an Ame
An investment bank is a financial services company or corporate division that engages in advisory-based financial transactions on behalf of individuals and governments. Traditionally associated with corporate finance, such a bank might assist in raising financial capital by underwriting or acting as the client's agent in the issuance of securities. An investment bank may assist companies involved in mergers and acquisitions and provide ancillary services such as market making, trading of derivatives and equity securities, FICC services. Most investment banks maintain prime brokerage and asset management departments in conjunction with their investment research businesses; as an industry, it is broken up into the Bulge Bracket, Middle Market, boutique market. Unlike commercial banks and retail banks, investment banks do not take deposits. From the passage of Glass–Steagall Act in 1933 until its repeal in 1999 by the Gramm–Leach–Bliley Act, the United States maintained a separation between investment banking and commercial banks.
Other industrialized countries, including G7 countries, have not maintained such a separation. As part of the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010, the Volcker Rule asserts some institutional separation of investment banking services from commercial banking. All investment banking activity is classed as either "sell side" or "buy side"; the "sell side" involves trading securities for cash or for other securities, or the promotion of securities. The "buy side" involves the provision of advice to institutions. Private equity funds, mutual funds, life insurance companies, unit trusts, hedge funds are the most common types of buy-side entities. An investment bank can be split into private and public functions with a Chinese wall separating the two to prevent information from crossing; the private areas of the bank deal with private insider information that may not be publicly disclosed, while the public areas, such as stock analysis, deal with public information. An advisor who provides investment banking services in the United States must be a licensed broker-dealer and subject to U.
S. Securities and Exchange Commission and Financial Industry Regulatory Authority regulation; the Dutch East India Company was the first company to issue bonds and shares of stock to the general public. It was the first publicly traded company, being the first company to be listed on an official stock exchange; the Dutch helped lay the foundations of the modern practice of investment banking. Investment banking has changed over the years, beginning as a partnership firm focused on underwriting security issuance, i.e. initial public offerings and secondary market offerings and mergers and acquisitions, evolving into a "full-service" range including securities research, proprietary trading, investment management. In the 21st century, the SEC filings of the major independent investment banks such as Goldman Sachs and Morgan Stanley reflect three product segments: investment banking, asset management, trading and principal investments. In the United States, commercial banking and investment banking were separated by the Glass–Steagall Act, repealed in 1999.
The repeal led to more "universal banks" offering an greater range of services. Many large commercial banks have therefore developed investment banking divisions through acquisitions and hiring. Notable large banks with significant investment banks include JPMorgan Chase, Bank of America, Credit Suisse, Deutsche Bank, UBS, Barclays. After the financial crisis of 2007–08 and the subsequent passage of the Dodd-Frank Act of 2010, regulations have limited certain investment banking operations, notably with the Volcker Rule's restrictions on proprietary trading; the traditional service of underwriting security issues has declined as a percentage of revenue. As far back as 1960, 70% of Merrill Lynch's revenue was derived from transaction commissions while "traditional investment banking" services accounted for 5%. However, Merrill Lynch was a "retail-focused" firm with a large brokerage network. Investment banking is split into front office, middle office, back office activities. While large service investment banks offer all lines of business, both "sell side" and "buy side", smaller sell-side investment firms such as boutique investment banks and small broker-dealers focus on investment banking and sales/trading/research, respectively.
Inns issuing securities and investors buying securities. For corporations, investment bankers offer information on when and how to place their securities on the open market, an activity important to an investment bank's reputation. Therefore, investment bankers play a important role in issuing new security offerings. Front office is described as a revenue-generating role. There are two main areas within front office: investment banking and markets Investment banking involves advising organizations on mergers and acquisitions, as well as a wide array of capital raising strategies. Markets is divided into "sales and trading", "research". Corporate finance is the aspect of investment banks, which involves helping customers raise funds in capital markets and giving advice on mergers and acquisitions